Ed & Cindy Knight

It's Time to Spring Forward and say Good Bye to the Michigan Snow

and Hello to Spring

.. and don't forget when you turn back your Clocks tonight to

change the batteries in your Smoke Detectors

and re-set your breakers and change your fuses

Every year about this time homeowners receive their State Equalized Value or SEV in the mail.

That's usually about the same time our phone starts to ring asking us "why did my taxes go up". This year it's "why did my taxes go up if home prices are falling ". So this year I am going to explain it the best I can - since the state does not make it easy to understand.

Okay here goes (and Dad, I hope you are reading this):

First there are 2 values - one is a Taxable Value and the other is the State Equalized Value. The taxable value is the value at which you are taxed and the SEV is what the state or city feels you home is worth divided by 2.

Now before you start screaming at the computer and tell me homes are not selling for that in your neighborhood - let me explain. The city/township assessor does not determine the value on each individual home. What they do is randomly take a certain number of homes sold, put them into a computer and determine what the average sales price would be, for a home like yours. They also do not track home prices; so if you buy a foreclosure for 30% under market that does not mean your SEV will come down. Your SEV will still be based on the average sales price.

To better understand how all this works let's look at the history behind it. In 1994, Proposal A was passed. Since then, when you purchase a home, you assume the seller(s) SEV. At that time their Taxable Value is uncapped and the new taxable value and SEV become equal. Then each year your taxable value goes up by the CPI (Consumer Price Index) usually 3-5% per year, however, it can not exceed 5%. Whereas, your SEV can go up as home prices go up. Which is what happened in this area from 1994 until about 2004.

Now let's say you bought a home in 1994 for $200,000 and the SEV at that time was $100,000. As stated above your taxable would also become $100,000. The chart below uses my example a CPI of 3% every year and the average sales data in Macomb County.

As you can see the SEV's went way up but over the past few years they have been going down. However, they will not effect your Taxable rate Until they are the same as the SEV. Once this happens your SEV will push your taxable down. This explains why your taxes may be going up while property values are dropping. Proposal A states that taxable values can not exceed SEV's.

Back to the question Should I fight my SEV?

The information below may help you determine if you can and should

• According to the cities/townships 2009 assessments are based on sales data from October 1, 2007 - September 30, 2008. However, according to those that appeal taxes this is not true.
  
• SEV reductions will only reduce your taxes IF your SEV pushes your taxable value down. But this can also help you when selling your home.
  
• The city/township May use distressed properties like foreclosures or short sales in their sales data.
  
• If you feel your SEV is to high hire a professional to help you appeal it. Harold Hoyt at Professional Property Tax Appeals is one of many in the area.
  

Stay tuned for more information on Millage Rates and how Property Taxes can effect your mortgage payment. Feel free to contact with any questions you have regarding the above information or leave a comment below.

Why do Buyers offer less?

Last week I showed a condo that was priced at $110,000 and it was actually in very good shape with newer items. The complex was built in the late 80's but the association has done a fine job of maintaining it and even recently replaced the roofs, siding and gutters. The fee's are still low and the unit was in a great part of the complex.

Get this the buyer wants to offer $90,000 - $95,000 because it is a buyers market. I wanted to scream "You can't discount a discount". Here's the best part - in 1995 these units were selling around $110,000 and at the peak 2004 they were getting around $155,000. So at $110,000 I would say this is already a discount.

So why is it that buyers today want to Discount an already discounted price?

It seems like they find something they like then go for the throat and offer 15%, 20% and some even 50% less. I wonder sometimes if they really want to buy. Where does this stuff come from? The news? The web? Their family & friends? Please someone tell me who is teaching buyers this stuff????

If you really want to buy a home you need to listen to the professionals!

As REALTORS we have access to the comps, so we know not only what homes and condos in the area are selling for but we can show you how much less the offers have been. In today's Macomb County market we are having to go back over 10 years in some areas. But we do have the data. Buyers need to quit listening to late night TV, their aunt Millie, their good friend Johnny and the media.

There is a pinnacle point at which every home sells, when the scale tips in favor of the seller and that is when offers are made. If you play the "it's a buyers market game" and try to "discount a discount" by making an offer below that point, you will lose the home and be out bid by another buyer.

Believe it or not Macomb County homes are selling and sometimes with multiple offers

Regardless of what you hear it is a great time to buy a home or condo. Prices are low, rates are low and Uncle Sam is giving an $8000 tax credit. Currently 17% of the market is bank owned homes and condos however 70% of what's selling is bank owned. That means the discounts are moving off the shelves and fast.

So if you find a home you like move fast but please do not Discount a Discount!

So after reading my post from yesterday I decided it may have been a bit negative and perhaps I should listen to my good friend, "The Real Estate Therapist" Tamara Dorris.... to start Thinking Positive Thoughts again. Especially, after reading her blog post Attitude of Gratitude. In it she talks about what you think and say being sooooo important.

Okay now that I have slapped myself around and I am thinking positive thoughts again I can start writing.

Back in the late 90's ED and I joined Amway also know as Quixtar. Let me tell you that is a group of Positive People. Our group leader at the time suggested we not listen to the news, not think negative thoughts, stay away from bad seeds, build a dream board (stuff you really want) listen to motivational tapes and read positive books. Do you know why? So we were always thinking positive thoughts because they knew every time we even mentioned the word Amway people would freak out, it was crazy. Well today we no longer have a group but we still use many of their fine products and the lessons we learned. It really is a great company.

But you know Amway really helped Ed and I build alligator skin against the negative people we had to deal with daily. People that we were trying to help that could not get past the negative they heard. Well today we are dealing with the same thing. Everywhere you turn the media, the congress and even the president all talk negative. Even I have fallen into it and I of all people should know better as the owner of a real estate company. I need to stay positive to help my sellers and my agents.

Now we all could learn a ton from Jay Van Andel and Richard DeVos the owners of Amway. They built a huge company from their garage in the 50's that is still around today. They managed to run a positive company with negative all around them.

So here's my bit of positive for today - Real Estate Sales in Macomb County were up in 2008. Yep, there were 6794 homes sold and 1285 condos sold. You know what? Last time we saw those numbers was 1994 - 6806 homes were sold and 1037 condos were sold. I guess we are heading back up again.

On February 10th, President Obama hopped aboard Air Force One and made a stop in SW Florida. The purpose of his trip was to sell his stimulus package, to the folks of the hard hit Florida real estate market. But as Linda Flack recently stated their real estate market has actually hit bottom and not doing that bad.

Then he jetted off to Denver Colorado to sign the economic stimulus bill. Why Denver? Well according to the media the President went to Denver because they are a "green" state. Plus as Jim Luz recently reported on his blog, Denver was named 1 of 12 Solar America cities.

The next day the President headed off to Mesa Arizona to sign the Housing Bailout. Meza like Florida is experiencing huge amounts of foreclosures and falling values. Hey what better place to sign the bill.

Hey President Obama what about Detroit, Michigan???

Remember us? Back in the early 1900's we put tons of people to work building automobiles. We are also the state that shifted all our plants during the wars from automotive to tanks to help out the country. Loads of people black and white came here to work. Our state was the true melting pot of America. Everyone came here to work immigrating from all over the world. You may know us better as "The Motor City Capital of the World" people usually refer to GM, Ford and Chrysler as the Big Three. We were once a thriving manufacturing state.

In case you forgot we are having some financial problems here. Remember back in December when the auto execs came to Washington and were told to come back when they had a better plan? I'm sure you remember when you and many lawmakers chastised the auto execs for using their private company planes when they came to Washington? BTW the United States of America is having some HUGE financial problems too, so perhaps you should park Air Force One and just sign the bills in Washington. Besides saving the tax payers some money it would be the "green" thing to do.

I don't mean to be disrespectful President Obama but Michigan unlike Mesa and Fort Myers is hurting pretty bad in terms of employment and housing. So why not stop here in Michigan? Oh yea just in case your staff forgot to tell you Michigan's unemployment numbers look pretty bad compared to FL, CO and AZ, according to the Bureau of Labor Statistics.

Now you may not know this but Michigan unlike the other states did not have all kinds of second homes being bought and sold for profit or speculators buying up pre-construction developments, doubling their prices. Nope we simply had middle America moving their families. Those same people that work in and around the automotive field.

As you can see from the chart below our sales prices did not double in 2003 or 2004 like Florida and Arizona. But they did come down quite a bit. From what I have read Mesa like Fort Myers is back to 2003 prices. So the way I figure less people were effected than here where bank foreclosures have put us back to 1997 - 1998 prices. Check out my Tale of 2 Condos to see what I mean.

Well that's all for now I just thought I should share with you and the rest of the country what's been happening here in Mitten state since you did not stop by.